With the exception of Lagos State, none of the states can sustain itself without funds from the monthly sharing of revenue by the Federation Accounts Allocation Committee (FAAC).
States in the country appear to be in a race against time as they confront the economic realities of the recent removal of petrol subsidy and other cascading policies initiated so far by President Bola Ahmed Tinubu, in the governance of their states. Yet, it is a crisis foretold. With the exception of Lagos State, none of the states can sustain itself without funds from the monthly sharing of revenue by the Federation Accounts Allocation Committee (FAAC). Their internally generated revenues are simply too hollow to sustain any proper fiscal activity. Misappropriation of funds, lack of vision, misplacement of priorities, award of dubious contracts and padding of payrolls by the bureaucracy, have conflated with the shortage of creativity in governance to deepen the mess.
For the states to bail themselves out of their quagmire will require governors to reset governance templates. The new direction should be anchored on prudence, revenue base expansion, lean cabinets and bureaucracies primed for service delivery, accountability and fighting corruption in all its nuances. Any state that ignores these imperatives is on a course to perpetual chaos.
Governor Godwin Obaseki of Edo State was farsighted in his Workers Day address when he warned that no level of governance in the country, including the federal government, will be able to pay salaries beyond June without resorting to the Ways and Means advances of the Central Bank, or funds freed up by the removal of petrol subsidy. To achieve this, the parliament enacted a law that increased the threshold of these advances from 5 per cent to 15 per cent of the revenue of the government in the previous year, which could be given as a loan.
Obaseki was brutally frank in his summation: "Either of these decisions will bring more hardship and pain to Nigerians, particularly the workers." Citizens are at a lachrymal juncture now. Edo and Kwara states have reduced their work week to three days, to enable workers adjust to the hikes in transport fares, which have risen to as high as 300 per cent in some places. Edo State has added N10,000 to the minimum wage, an increase which is disproportionate to the inflationary spiral.
The naira has been floated as the Federal Government forges a convergence of the exchange rate of the dollar in the official and parallel markets. This equilibrium was achieved last Wednesday with the N753 to $1 recorded in both markets. This has further devalued the naira, thus worsening inflation. Labour has tabled a N200,000 minimum wage demand to the government, which will be looked into by a tripartite committee comprising representatives of the Federal Government, labour and the private sector. But it is a no-brainer to imagine the eventual outcome. The truth is that national revenue cannot match labour's expectations. This scenario is likely to promote industrial disharmony.
As of July 2022, three years after the N30,000 minimum wage came into effect, 15 states were yet to implement it, citing fiscal distress. How those states will overcome the present reality beggars belief. Besides, other states are wallowing in questionable debts, non-payment of salaries and pensions. Governor Alex Otti of Abia State, in fulfilment of his election promises, says he will start to clear a backlog of 30 months from June end. He said recently that the total indebtedness inherited from the previous administration "at the last count was over N200 billion."
Central to the states' rescue plans is a reduction in the cost of governance. The era of having 1,000 aides, as former governor Isa Yuguda had in Bauchi State, is gone. The reckless lifestyles of governors having state-procured jets for gallivanting all over the place must stop. There is no reason, for example, why a governor should have more than five vehicles in his convoy, as against their accustomed and obnoxious practice of deploying about 22 vehicles in a trip. It will cost a fortune to continue with this extravagance, with petrol now selling for between N488 and N700 per litre, depending on location.
The phenomenon of ghost workers and pensioners has created a deep hole in the treasury of many states, such that 13 states had 15,397 ghosts on their payrolls in 2021. The number is still growing! Some states have been dealing with it tepidly, whereas it is an incubus that demands a decisive and fatal blow. This criminal behaviour recommends itself to penal clampdowns. Permanent Secretaries, directors and payroll officers should be held to account for such fraud in their various agencies or departments.
In July 2022, Ondo State discovered that it lost N500 million to ghost workers in a pension and salary racketeering scheme. A report submitted by the Victor Olajorin-headed panel, uncovered double salary earnings by some workers, while there were instances of retirees collecting both their pensions and in-service salaries. Governor Rotimi Akeredolu was right to be livid as he received the report. He said, "We have a bloated workforce and undoubtedly I am sure there are many (more) ghost workers." Commendably, he directed the Head of Service to dismiss such dubious workers. Since the governor was aware that more of such felons are still in the system, his best response would have been to make the suspects face the law and go to jail. The Teaching Service Commission alone incurred N497.7 million of this fraud. There are states with worse records.
In January, 199 out of 280 medical doctors on Zamfara State's payroll were ghost workers. The aggressive approach of former Governor Seriake Dickson in Bayelsa State, when he faced a more difficult situation, recommends itself to others. The N6 billion monthly wage bill he inherited was reduced to about N3.5 billion after great scrutiny and he introduced a legislative response to this financial crime. With the Bayelsa State Fraud and Related Offences Act 2012, culprits faced serious punitive sanctions when caught, and payroll scam retreated.
Since 2019, over N40 billion has been paid to 47 former governors in 21 states, in obscene retirement financial packages. The madness started in Lagos State in 2007. It then spread like a hurricane across the country. State houses of assembly had to pass laws to give these packages the legal imprimatur. Besides cash, the former governors are bought fleets of cars, fuelled by the states, and furniture, which are all renewable every four years. Also, two mansions are built for them - one in their states, and the other usually in Abuja, preferably in Asokoro and Maitama zones, where a plot of land could go for as much as N500 million.
But with dwindling revenues and the fiscal exertions of such payments on the lean treasuries of states, it is time to abolish them. Continued receipt of such payments by these people already made rich by virtue of their previous political appointments, is the height of greed and insensitivity. Yet, a few ex-governors have refused to be part of this extortion because of its moral odiousness. Therefore, state assemblies, as representatives of the people, owe it a duty to repeal the various laws that legalised the pension packages, to free such funds for development.
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States should aggressively create an environment that fosters foreign capital inflows to their domains; develop the agricultural sector for more revenue generation and job creation. According to data from the National Bureau of Statistics (NBS), 32 states could not attract foreign capital in the second quarter of 2022. Only Lagos, Anambra, Ekiti and Kogi did, but in minuscule sums of $1.05 billion; $24.7 million; $500,000 and $2 million respectively.
Agriculture remains a resource not well harnessed in our states yet. Anambra State, under Governor Chukwuma Soludo, has swung in the right direction in this regard with the importation of two million Malaysian palm oil and coconut seedlings. The target is a yearly revenue of N160 billion from these to lessen dependence on allocations from Abuja. Instructively, most states have not taken advantage of the Federal Government's liberalisation of the solid mineral sector, to attract investors that will operate within the ambit of the law. What is in vogue is yielding this underground wealth to artisanal miners, opaque licensed operators and their foreign rogue counterparts.The new governors and state legislatures should subject debts and other liabilities their states inherited from immediate-past governors to serious scrutiny. Nigerians witnessed a binge of supplementary budgets in billions of naira and contract approvals in some states. Inquests, therefore, should be conducted to save the public treasury. Perhaps, the affected states were influenced by the National Assembly's irrational approval of a $800 million loan to the Muhammadu Buhari regime, just two weeks before its departure. States whose governors remain adamant, or fail to align with the new realities, will wilt. There are no two ways about it!
